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Last Updated: Friday, 12 October 2007, 16:56 GMT 17:56 UK
A field of dreams?
By Tim Egan

Wheat prices have tripled
It's like another gold rush, but is the race to grow crops for bio fuels such a field of dreams?

In the flatlands of the American interior, grain is flying off the fields. Corn, wheat and barley are thrashing through combines.

And to watch the farmers behind the harvest, you would think you were on Wall Street instead of Green Acres. Members of the boots-and-baseball hat crowd sound more like tassel-loafed brokers on a binge, spinning straw into gold. And in a sense, they are.

Welcome to the latest field of dreams. Farm prices have not been so high in a generation. Wheat has more than tripled from the price of a few years ago. Corn is up 80% or more.

I bring you this news from the farm, not as a discourse on why breakfast cereal may soon cost a bit more. But rather, consider this as another variation of the old saw about being careful what you wish for. Or perhaps it's simply a tale of supply-and-demand economics.

For years people in rural America have been touting ethanol as the best path to energy independence. It's easy to make. It's just refined alcohol, usually processed from corn.

It's a start toward a more local energy economy - connecting consumers to producers.

There's a seemingly endless supply of it. It doesn't involve sending billions to foreign despots. It doesn't release as much carbon into the atmosphere as petrol-based fuels do. And for years, most everyone else rolled their eyes and continued to fill up their SUVs with cheap gasoline, ignoring ethanol.

It was a niche, at best. A political bargaining chip for farm states during presidential election years. See Iowa and ethanol - two words that tumble out of the mouths of political candidates with quadrennial regularity. But as oil prices have crept past $80 a barrel, that fuel from the farm started to look a lot better.

At the same time came hefty tax breaks, government mandates to quadruple ethanol production and Wall Street venture capital sniffing around the edges of the prairie. Just like that, the old scarecrow patch became a lot more profitable.

Now 129 plants are making ethanol, mostly in small towns dotting the American mid-section, and another 80 are under construction. Half the states in the US have ethanol plants and it may soon be the leading producer in the world of this home-grown fuel - right up there with Brazil, which makes its fuel from sugar cane.


That ka-ching you heard was coming from farmers making high-performance moonshine from amber fields of grain. In their vision there will soon be a "grass station" in every town, powering a fleet of new cars running on bio fuels.

What's left over might even be used for traditional moonshine. That is, grain alcohol. A plant in small-town Minnesota does just that, producing a high-end vodka in addition to several million gallons of transportation fuel.

One of the farmers I spoke to in the Interior West, a fellow named Read Smith, brought up the other reason people who work the land are so excited about ethanol: the prospect of a renaissance in rural America.

An evangelist for ethanol, Smith was so excited I had to check for dirt under his fingernails to make sure he was a farmer. Towns, now dying, would get a fresh lease on life through ethanol, he said.

Trading floor
Ethanol prices are trending downward
The shuttered factory could re-open, with minimal investment, as a farmer-owned refinery, taking Jed's corn to make Jeremy's tractor fuel. Young people, now leaving in droves, would stay behind, lured by the promise of a new, $700bn-a-year industry.

On top of that is the draw of economic nationalism. Not long ago I drove through a small town in Missouri, where a new ethanol plant is the pride of the community.

A yard sign, showing a picture of corn, a gas pump and the American flag, carried the slogan: Our Crop. Our Fuel. Our Country. The not-so-subtle implication, which you hear farmers mention time and again is - stick it to those Arab oil billionaires.

The goal of the ethanol enthusiasts is to have farmers and foresters produce 25% of American energy by the year 2025. As it stands, the US now makes about six billion gallons of ethanol. It's barely enough to replace a mere 4% of the nation's gasoline consumption. And most of that is used in blends.

The "Big Vision" sounds wonderful to farmers who have long complained about bad weather, bad prices, bad rural economics, bad global economics, or some combination of woe.


Hard times in the wide open spaces date to the Dust Bowl storms of the 1930s. Since then, more than half of the counties in the western Great Plains have lost population - a steady drip, drip, drip of out-migration and loss. Banks are boarded up. Stores are shuttered. Schools are closed, never again to hold a child's voice.

Overstatements, critics believe, set ethanol up for a fall to begin with
So, you can see why ethanol is greeted as the salvation of the rural economy. But reality has intruded. This new fuel, after all, comes from food. Corn is used for everything from cereal to soda pop. Corn fattens hogs and chickens and cattle. So, of course, as the demand for corn in bio fuel has soared so too have food prices.

This makes corn farmers happy, but everybody else in the food production chain is not. Earlier this year there were large protests in Mexico by people who claimed that ethanol demand had caused tortilla prices to double.

Whether ethanol is truly to blame for higher food prices is debatable. No one ever thought it would take off this quickly and the market may be in for a settling, which will level prices. Still, enough economists say there is a lesson here - you can't have your fuel and your food come from the same source.

Also, environmentalists have weighed in, pointing out that while ethanol is much cleaner than fuels that come from oil, it is not the panacea for global warming.

The process of converting fields into corn and then into fuel requires intensive amounts of fertiliser and old-fashioned petrol in the refining - ultimately adding to the carbon in the atmosphere.

Pump prices
Ethanol - E-85 in this case - definitely appeals to the pocket
A cleaner method - the sort of Holy Grail of ethanol - is the process of making fuel from straw, or field waste, or wood chips. This is not a pipe dream. It can be done, as a small plant in Canada and other projects in Europe have demonstrated.

But the price, for now at least, is prohibitive because the processing is so much more difficult, although the hope is that costs will come down.

And of course, big oil has cast its shadow over the "field of ethanol dreams". The oil industry initially tried to get in on the boom. Most ethanol plants are now farmer-owned co-ops. The little guy can actually produce ethanol cheaper than the big guy.

Failing to get a toehold on the farm, the oil industry has since funded an anti-ethanol campaign. All sorts of so-called "experts" - many, it turns out, on the payrolls of oil companies - have been sounding alarms about bio fuels. But to be fair, some oil companies are still trying to partner with ethanol producers.

Cold and fallow

But perhaps the biggest blow yet has come from the free market. If it looked like a good thing to plough up prairie grass and plant corn for the ethanol boom in Kansas, it also looked the same way in Missouri, or Idaho.

I met a farmer outside the one-stoplight town of Burley, in the high desert of the Interior West, who told me he was going to rip out all his hay, which requires very little care, and plant a special kind of corn so he can make a killing in the ethanol boom.

Yes, sir, he told me - it's a sure thing. Right. Just like all gold rushes. Now, guess what? There's a glut. In fact, there's a huge glut.

Crops require intensive amounts of fertiliser
Farmers and the small towns that service them built their refineries nearly overnight. But at the other end - cars that use ethanol, stations that pump it and actual consumers who will trade in their gas-fired rides for moonshine motors - they have not kept up.

So, while food prices remain high, ethanol prices are trending downward, off nearly 30% on the spot market since May. So, is this the beginning of the end of the big ethanol dream? Killed, just as it got going?

Most farm economists say no - ethanol will find its place. Now, maybe it won't replace all the imported oil - more than half of US consumption - and maybe it won't save the planet. Such overstatements, critics believe, set ethanol up for a fall to begin with.

But even if we can't farm our way to energy independence, it's a start toward a more local energy economy - connecting consumers to producers.

That may be enough to keep people on the land, people who dream of putting something in the ground just as it goes cold and fallow. Because, more than anything else, they are farming tomorrow.

Below is a selection of your comments.

Brazil has been doing this for decades, ever since they stopped supplying the USA with unfairly-traded sugar and decided to turn it into motor fuel. Why hasn't the world followed? Might it have something to do with the fact that "ethanol" is the same stuff that the food and drink industry calls "alcohol" or "spirits"? For centuries the distillation of spirits has been tightly controlled, with bonded warehouses and Customs and Excise inspections. To see the rise of a parallel industry producing the same stuff in massive quantities without the same controls must be daunting to our tax officials. But if the alternative is climate change from burning fossil fuel and our boys dying in Iraq in a vain attempt to guard our oil supplies, why don't our ministers tell HM Customs & Excise to exercise a little imagination over the problems involved?
Ian Clark, Whitby, England

Calculate the amount of land needed to produce even 10% of a country's current oil consumption and for many - like the African continent, already unable to feed itself, you will see the physical impossibility of making even a minor contribution to its total needs. Remove the subsidies then see what happens.
T B Muckle, KENYA

Bio fuels are a great boom for the Mid West states but at what cost. That tractor that plows the field is run on Diesel the plant runs on various oil products either to add to the ethanol or to run the plant such as the electricty it need to run. Then when we have a completed product it is put in a Diesel run truck to transport to the station. Now how about those grass lands that are set aside because they clean the ground water that is used for drinking and to water and other uses if we dig this up the aqua fur will no longer have a recharge zone. I grew up in the Iowa and i know how much this new means to the people in all of the mid west so i hope we can find ways to make this truly the fuel to atleast in part replace the oil that comes from the middle east and put the money back in our pockets.
Mark D, Austin USA

Do you want to pay $12.00 for a loaf of bread? Farmers want to max proffit potential, so growing fule may pay more than growing food and produces more pollution overall than what we have now.
Alistair Aldridge, Markham, Canada

It is fine until we can't afford the high price of food and we will have to compromise by not buying fuel
Brian Allman, Hyde Cheshire

BioFuels see to be the latest buzz work and will probably become a "gold rush" with farmers switching to growing biofuel crops instead of typical food crops (e.g. carrots). Eventually I can see certain food prices rising, likee bread or flour, as this will be diverted for fuel production. Mind you at least there will be more than enough Bio-Ethanol available to make starving to death once hell of a party!
Corsa Driver, Norfolk, UK

Degradation of arable land; wheat prices at record high; starving people. Growing crops for fuel is the dummest idea I have ever heard.
Joe H, Guildford

Although I welcome any idea that replaces petrol use with 'greener' fuel, I think that one of the reasons why we are being repeatedly disappointed by other fuels is that we are expecting them to work exactly the same way that petrol does. The sooner we go back to the drawing boards and find alternative ways to power our transport without pumping it into an internal combustion engine the better. Using any fuel that is farmed like corn will have an impact on the diet of someone elsewhere. This question and answer is all about looking at the problem in a new way rather than trying to fit a new fuel into the gap left by petrol or diesel.
Heather, Willenhall

As the farmers rip out yet more hedges and biodiversity to extract yet more money from the ground they are industrially and mechanically estranged from is there really any difference between these "modern" farmers and the slash and burners of the amazon? How much has the EEC agricultural policy contributed to global warming? History points to the eco collapse of ancient Egypt and Greece and their civilization demise. Should we subsidize the destruction of nature or should we only subsidize ecological growth? This means reduction of pesticides and nitrates drastically and growing natural field boundary of a biologically usefull density and spread.
themosthandsomemanever, UK

What about the billions of poor people in the world with no food to eat? Now the rich people can grab away food from their plates and burn it (literally) in their SUVs!
Abhishek Rawat, Pune India

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